Will I be taxed twice on my Spanish property?

Who taxes first

Under the treaties Spain has signed with the UK, Ireland, Germany and most other countries, the country where the property lies has the first right to tax it. Spain therefore taxes your rent, your imputed income and any gain on a sale. Your country of residence may also tax the same income, but must then relieve the double charge, either by a credit for the Spanish tax or, in some treaties, by an exemption.

The credit is capped

With the credit method used by the UK, Ireland and Germany, you deduct the Spanish tax from your home tax on the same income, but only up to the home tax. An example for a UK resident who lets a flat:

• gross Spanish rent: 10,000 €
• Spanish tax at 24 % on gross: 2,400 €
• UK taxable profit after UK-allowed expenses: 6,000 €
• UK tax on that profit (say at 20 %): 1,200 €
• credit allowed: 1,200 €, so no further UK tax
• Spanish tax not relieved: 1,200 €

The owner is not taxed twice, but ends up paying the higher of the two charges, which is the Spanish one. An Irish or German resident, taxed in Spain at 19 % on the net, is much more likely to have the Spanish tax fully absorbed by the credit.

Imputed income: a Spain-only cost

Most home countries do not tax the notional benefit of using your own holiday home. With no home tax on that income, there is nothing to credit the Spanish imputed-income tax against. It is not double taxation, since only Spain taxes it, but it is also never recovered. Belgium and some other countries handle this differently through the exemption method, as explained in the Belgian page.

Getting the relief right

1. Keep your Modelo 210 returns and payment receipts: your home tax office may ask for proof of the Spanish tax.
2. Convert amounts at the rates your home rules require.
3. Report the income in the right year at home, which may not match Spanish grouping.
4. Ask for a certificate of tax residence when Spain needs proof of where you live.

For the UK and Irish forms, see declaring at home, and for Germany, the Anrechnung method.